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2/26/2020

Refinance Now!

The time to refinance is now!

Bad news makes mortgage interest rates go down.
Lower than they have been for eight years today!

Call and let's get you into a 30 year fixed rate safe loan.

Don't wait until everyone is swamped.
 2.75% 30 year fixed conforming loan
FICO middle 721 no points 2.79 APR

NO Cost you get appraisal back at closing,
if needed, about 40% of people don't need
a full new appraisal

(949) 784- 9699

Caroline Gerardo Barbeau
C G

NMLS 32498
Pinnacle Home Loans

Let's talk about what you need

Equal opportunity Lender.
This is not a commitment to lend.
Get ready to save on your monthly payment!



2/24/2020

TRID survey

To mortgage originators, loan officers, mortgage bankers please follow the link to the survey.
This may have them review possible changes.
CFPB is asking for input on how TRID changed the market from 2015 through 2018.
You need information on your own "shop" as to number of loans, total dollar amounts and a few details about your bank, mortgage company, credit union or private money to answer about three of the questions.



The survey takes ten minutes if you aren't long winded, as I was about my experience 
of thirty years as a Mortgage Loan Officer and banker.


Things they forgot to ask:
1. What is the cost increase to the consumer?
2. Is it unfair that under-served communities who don't have a personal computer
 have to wait longer for USPS mailing?
3. Cost increase as to adding employees, buy backs, secondary selling loans 
to scratch and dent loan servicers/entities to hold.
4. Cost increase to Borrowers who lost rate locks, didn't close on time in 2015.
5. What can be done to service more minority and rural borrowers who are
inundated by fifty page long emails that they don't or cannot read?
6. Did the increased turn time harm Borrowers? (extra anxiety and time is money).


Mortgage
 Bankers Association
1919 M Street, NW, 5th Floor Washington, DC 20036 (800) 793-6222
 
       
The CFPB is currently conducting its assessment of the TILA/RESPA Integrated Disclosure Rule (TRID). As part of its information gathering efforts, the Bureau has prepared a survey for mortgage lenders. Specifically, the survey is intended for “representatives of mortgage loan origination institutions that provide residential mortgages covered by the TRID Rule.”
We encourage you to participate in the Bureau’s TRID survey. While the assessment is unlikely to lead to an immediate rule making, its findings influence the Bureau’s decision on whether future changes are necessary. For this reason, it is important that the Bureau’s TRID assessment accurately reflect the housing finance industry’s experience with TRID rule.

The survey is live and may be accessed using the below link or from the Bureau’s website. As the survey instructions indicate, the Bureau requests that each institution submit only one response to the survey. To find the survey click your closest job title and scroll all the way down to the next tiny blue arrow on the bottom right side of the screen.

The link brings you to a page that lists three TRID surveys: the Loan originator survey, the Loan officer survey, and the Closing company survey. The survey intended for institutions that are mortgage lenders is the Loan originator survey.


 TRID survey herehttps://www.consumerfinance.gov/data-research/trid-assessment-industry-surveys/
 online version.







2/15/2020

Student Loan Crisis


Congressional Budget Study on Student Loans

Will they pass a bill to end Income Repayment?

Income Repayment Plans have allowed students to decrease their monthly payment; but like a Negative Amortization Loan before the Crash of 2008 the balances grow and become heavy. This type of loan was outlawed in 2009 for real estate as when trouble hit, and values decreased borrowers found themselves upside down.

Income repayment plans don't pay off the student loan debt in ten years as was planned,
in fact they often burden the student for twenty or more years.
Graduate student borrowers receive eight percent of the federal subsidy through
income driven repayment plans and the cost to taxpayers is rapidly rising.
Congress estimates we lose seventeen cents on every dollar on income repayment loans due
to longer servicing time and defaults vs thirteen cents through standard fixed rate plans

The whole report is here just released February 12th, 2020

https://www.cbo.gov/system/files/2020-02/55968-CBO-IDRP.pdf


I have mixed feelings on the whole student loan mess. I view it from my personal
seat having saved a 529 plan, paid for my graduate degree, paid for my children's
undergraduate degrees, and worked three jobs. The money I saved was never enough.
In my youngest son's graduating year 2020 I took on parent loans as everything
costs so much. He wasn't able to get all the Engineering classes in a row (U C system
tends to have less than enough professors for upper division classes). It took an extra year.

I also look at the problem from as a person who graduated with a MFA from a renown,
expensive, private school. I struggled to make a living and came to the realization
I must switch careers in order to support my family.

As a tax payer I feel burdened paying forty percent of my W-2 income to give those who
come after a free graduate education. When my home was upside down I stuck it out and paid the
monthly payment. I don't feel that a graduate degree in Arts, Liberal Arts and Humanities
should be free. It's not that I don't experience the value of poetry, painting, and music -
I am a creative person. I am not certain the academic racket is worth twenty years of
payments and the careers aren't there to support the payoff.

What are we to do?

There are millions of people in America who went to a for profit institution - you know
the ones that advertised on the radio and recruited at High Schools (many
now closed) with the sales pitch that grants and loans would get them a high paying
job. Grants are wonderful. The problem is the school never spelled out what the monthly
payment would be and what the consequences would be of this burden. Also that a degree
from these For Profit schools had no value in the marketplace and cost double or triple what
an accredited university costs ($52000 - $65000 a year for a degree that is good as toilet
paper. See study here : http://www.ntanet.org/NTJ/65/1/ntj-v65n01p153-79-for-profit-higher-education.pdf

Higher education should not be life long pack on your back. I want Congress to allow
individuals to include their Federal student loans in a bankruptcy and wipe them out.
This puts the burden to demonstrate need on the courts and ends the long term pain.
If someone has a heavy weight that keeps them from climbing, this is a good recourse.

What solutions do you have?

2/02/2020

Self-Employed Close a Mortgage Loan

SELF EMPLOYED BUYING REAL ESTATE?

Don't be left in the cold














Self Employed Income Can Buy a Home
You have been self-employed for a long time, or you have a sideline gig business, or you are just opening a new income stream; but you don’t think you can buy a home or refinance. You have a marvelous CPA who uncovers every possible write-off and although your gross income is high, the net number is what traditional lenders use.
For some borrowers trying to buy a home, monthly income isn’t exactly easy to calculate. For instance, when the borrower doesn’t get a pay stub and W-2.
Freelance workers, business owners, commissioned employees, those with large percentage of bonus income, and other independent consultants are considered “self-employed”. Their income is determined by looking at things like profit-and-loss statements, 1099s and the past two years Federal tax returns. Lenders do not use state filings, so don’t provide the extra paperwork.
You don’t need to know how to calculate your self-employment income. I suggest you send me all your IRS returns for the past two years and we analyze, discuss, and review before I even pull your credit report. I need the 1120 Corporate returns, K-1, partnership returns, and your personal federal returns to dig out depreciation, interest paid for business loans, and any additional income to the bottom-line net number. I will add up the income and average it over 24 months, 36 months and past 12 months. I can also look at the gross income and propose we do a bank statement loan based on gross in a certain time period and divide that income in half. Later in this article I will discuss the ins and outs of the many bank statement loan programs.

The first spread sheet of numbers I create is the recent past two years self-employment requirement. We work together to show you have a website, or location or advertising established to show there is a legitimate business in operation. I may ask for a business license. I will check with the Secretary of State to see if your Corporation or LLC is in good standing and open for the past two years.
Mortgage lenders use the definition for a self-employed borrower as anyone who receives more than 25 percent of their income in non-salaried pay is reviewed as a self-employed person. This primarily includes those who work on commission or bonus. It also includes persons who own rental properties.
The lender’s definition of self-employed excludes those who own less than 25 percent of a business. A common example might be a partners where an investor or junior person who does not have controlling interest in business operations.
If you are self-employed, you will have to hand over more documentation than a salaried borrower would. Here are a few extra items you’ll need to provide:
§  2 years’ personal tax returns with all schedules
§  1099s
§  W2s from your self-employed business (if you pay yourself a salary)
§  All pages of the Federal personal returns for the past two years
§  2 years business tax returns with all schedules
§  K-1s
§  1120 (Corporate Tax Returns)
§  1120S (Partnerships and S Corps)
§  Year to date profit and loss statement showing current income is on track with previous years I suggest you email me all the income documents at the same time you call your CPA to prepare the year to date profit or loss. It's the numbers on the returns that hold the most weight. Showing a huge profit on the P and L varying form the returns, well, isn't going to be that useful. But don't show larger than normal loss.

§  Explanation to me if you receive most of your income at a specific time of year. In this case, it can look like your profit and loss statement is on track for lower income than in previous years. I will help you write this letter.

Various Types of self-employed businesses:

Sole Proprietorship: One person owns and controls the business. Income is reported on schedule C of your personal tax return. An example would be the single owner of a landscaping company. Generally a sole proprietorship is a smaller company.
Partnership: Two or more people own and control the business. Profits from the business are split between the owners.
Corporations: Stockholders own the business. These are large companies. A borrower who is 25% owner of a corporation is unusual to see on a mortgage application.
S Corporations: This is a corporation with a limited amount of stockholders. If you are owner of an S Corp, you’ll need to supply your 1120S tax return.
You may have the world’s greatest accountant; but he/she did not help you with getting a loan, he/she helped you to not pay much in income taxes.
There are several things that can trip up a self-employed borrower when applying for a home loan and providing tax returns to the lender. The fact is most self-employed persons do not show much net profit. Since the net number is what is used, for the past ten years since the crash it has been difficult for business owners to purchase a home or refinance to lower interest rates.
If you work full time and have a side business, do not plan on deceiving your lender into not seeing the losses. Typically, you schedule C on tax returns. Lenders require you to sign a 4506T upfront when you apply. This form is verified with the IRS to check your income verses what you stated, the w-2 forms, and any verification of employment. A week or so into the transaction when the 4506T transcript returns with losses showing, now you have set up suspicion of what else you may be hiding, and the loss is discounted from your income. It is always best to consider your loan officer like your priest.

Mortgage lenders, banks, investors and the secondary market are heavily regulated. They must be ready to prove that every loan they close is a qualified mortgage. Perhaps you have not applied for a home loan in more than ten years, today everything is checked more than twice. If you recently opened shop for your side business, a loss for just one year is considered.
If you closed your business after filing the previous year’s tax return, your loan officer guides you towards the proof needed to show the business officially closed.
Employee Expenses In the past you could claim non-reimbursed business expenses including mileage. These show on form 2106 in 2017 or 2018. These deductions are counted against your total W-2 income. An example of employee business expenses are tools and supplies not provided by the company, non-reimbursed mileage to work-related meetings, and cell phone charges if you use your personal cell phone for work.
Two-Year Self-employed Average Income: When a lender reviews business income, they look at not just the most recent year, but the past two year filed with IRS period. They calculate your income by adding it up and dividing by 24 (months).
Your loan officer should be experienced enough to tell you if your excuse for the income decline will be acceptable and is believable or you can prove to be true on paper. Remember your file is not viewed by only one person. Most loans are sold on the secondary market and the investor has to believe and accept your written letter, and they don’t know you and can’t speak with you.
Cash Flow Analysis Lenders review with a magnifying glass your bank statements to examine the cash flow of the business. Are there non-sufficient funds charges? Is the net at month end enough to purchase goods needed?
You may want to use funds from your business accounts from your down payment. Sometimes, the underwriter asks for a letter from your CPA saying that taking money from the business won’t harm ongoing health of the business and you have one hundred percent access to the funds. This may seem silly, as you can write a check as you please; but necessary for the file and for others who may review the file after you close.
Fannie Mae and Freddie Mac have spread sheets which calculate income for self-employed individuals based on each line item income or loss. Lenders may use their own method of figuring your monthly income. Some lenders have stricter guidelines called “overlays” which make the way they come up with your monthly income very different from one bank or mortgage company or end buyer of the promissory note and loan.
If your business is new (one year filed return or no filed returns) often you start operating at a loss. Lenders will weigh the loss against other current income you may have, this is why you need an experienced loan officer who gathers all the facts and comes up with an individual plan for your needs.
The self-employed borrower does endure more scrutiny that the standard pay-stub and W-2 employee.  
There are fortunately other income options to use as verified income for home loans.
These other categories of products are not sold to Fannie Mae, Freddie Mac or our government. They are often bought by hedge funds, pools of private investors and more. Bank statements can be used to extrapolate income. I will ask you for 24 months banks statements. We need one account. Let me repeat, we don’t take a couple different accounts and compile. I can use 24 months or 12 months or the last one month and half of the deposits less transfers from other owned accounts or one-time deposits are used then cut in half as the total income.
Bank statement loans use the deposits, your FICO lowest middle score, liquid assets, property type, property use, and property loan to value to determine the interest rate. Thirty- year, fifteen year, seven, and five-year loans are available. In general, I am going to convince you for the longest term (the thirty year if available) because in the future you may not have net income to refinance to a more conventional loan. The difference in interest rate between a “full documentation loan with income taxes” and a bank statement loan may be 1-2 percent higher. This is not a hard money loan.
Hard money loans are priced a much higher jump from 6.95 to fourteen percent depending on the total number of risks. Lower FICO, property that may take longer to sell, layers of risk determine the interest rate. To choose a hard money loan you as a borrower must have an exit strategy. Usually the best plan is to sell in the short range as plans to increase income or wait for sunshine rarely unfold in the short term.
IF you are purchasing an investment property there now are loans that only review the subject income and rents.
Fortunately, there are now options for self-employed borrowers. Let’s work together to see what is available. Please call me at (949) 784-9699  C G Barbeau NMLS 324982
I’ve been helping buyers close on their dream property for thirty years. There are solutions even if the bank turned you down. Equal opportunity Lender.
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Okay you read the whole thing. PLEASE REMEMBER TO WASH YOUR HANDS OFTEN for the count of 30 in hot water with soap and after every time you touched public spaces. This virus is awful.